Post on 10-Jul-2020
transcript
Serving Britain’s shoppers a little better every day12 April 2017Dave Lewis – CEO Alan Stewart – CFO
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Agenda.• A year of strong performance• Six strategic drivers• Detailed results• Building long-term value for our four key stakeholders
3
Positive sales growth1 Strong profit growth2 Strong cash generation3
A year of strong performance
£47.9bn £49.9bn
FY 15/16 FY 16/17
+4.3%
£2.1bn£2.3bn
FY 15/16 FY 16/17
+9.1%
1. Group sales growth at actual rates on a comparable days and a continuing operations basis.2. Group operating profit before exceptional items on a continuing operations basis.3. Retail cash generated from operations on a continuing operations basis.
£985m£1,280m
FY 15/16 FY 16/17
+30%
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Customers recommend1 Colleague engagement2 Supplier viewpoint3
A year of strong performance
60%
70%
77%
FY 14/15 FY 15/16 FY 16/17
1. Reflects % of Fans minus % of Critics answering the question “Based on your visit, how likely is it that you would recommend the following to a friend or colleague?” for large stores.2. Reflects % of colleagues recommending Tesco as a great place to work as part of our “What Matters To You?” survey undertaken every January and August for the Group.3. Reflects % of suppliers responding positively when asked “Overall how satisfied are you with your experience of working with Tesco?” as part of the annual Supplier Viewpoint survey.
0
5
10
15
20
25
1 FY 14/15 FY 15/16 FY 16/17
NPS +6FY 16/17
70%
81% 83%
FY 14/15 FY 15/16 FY 16/17
5
+1.6% +1.7% +140,000
Volume-based recovery Transaction growth Increasing footfall1
A year of strong performance - UK
1. Data from Kantar Worldpanel – change in customer numbers from Feb 16 to Feb 17.
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A year of strong performance - UK
1. 3Q 15/16 adjusted for the impact of non-repeated coupons in the prior year.2. Shows volume outperformance. Data is for Tesco Weeks 1-52 and is sourced from IRI Retail AdvantageTM, global insight providers to the retail industry.
IRI market definition excludes Aldi and Lidl.
(7.0)%
4.0%
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q2011/12 2012/13 2013/14 2015/161 2016/172014/15
0.0% 1.0% 2.0% 3.0% 4.0% 5.0%
General Merchandise
Packaged
Fresh
Total Food
Total Store
Market Outperformance2
FY 16/17
(3.0)% (2.0)% (1.0)% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0%
General Merchandise
Packaged
Fresh
Total Food
Total Store
Market Outperformance2
4Q 16/17
UK like-for-like volume
7
+0.5%
Asia +4.0%Europe+0.5%
Volume growth Sales growth1 Portfolio simplification
A year of consolidation – International
1. Sales growth at constant exchange rates on a comparable days basis.
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Our six strategic drivers – a progress update
1. A differentiated brand
2. Reduce operating costs by £1.5bn
3. Generate £9bn cash from operations
4. Max the mix to achieve a 3.5%-4.0% Group margin
5. Maximise value from property
6. Innovation
• YouGov most improved brand
• £226m of cost savings
• Group operating margin of 2.3%
• Released £0.5bn value
• 2,422 new products, PayQwiq,Free From Retailer of the Year
• £2.3bn retail cash generation
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0
5
10
15
20
25
30
Tesco Other UK supermarkets
A differentiated brandBrandIndex Score – an overall measure of brand health
Source: YouGov BrandIndex.
February 2017January 2014
10
15% more likely
to shop
Exclusive freshfood brands1 Unique proposition2 Great quality3
A differentiated brand
1. Exclusive fresh food brands now feature in 64% of customers’ baskets.2. Reflects percentage of customers who are more likely to shop at Tesco due to Brand Guarantee.3. Reflects increase in quality perception according to the YouGov BrandIndex quality index.
+564%
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15.0
16.0
17.0
18.0
19.0
20.0
21.0
22.0
23.0
24.0
A differentiated brandBrandIndex Score – quality
Source: YouGov BrandIndex, Quality.
January 2017January 2016
2016 YouGovMost improved brand
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13
A differentiated brandBrandIndex Score – quality
Source: YouGov BrandIndex, Quality.
March 2017January 2016
15.0
16.0
17.0
18.0
19.0
20.0
21.0
22.0
23.0
24.0
2016 YouGovMost improved brand
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Most improved brand1 Ad memorability2
A differentiated brand
1. YouGov “Brand Buzz” score improvement, Jan-Dec 16.2. Source: Tesco vs. Big 4, Nielsen TV Brand Effect, March 15 – Feb 17.
Brand Story of the Year
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
40% 45% 50% 55%
BRANDING
RECALL
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1,500 stores 25 23 10 3
Servicemodel improvements1
Simplifying our distribution network2
Streamlining Central European transport3
Reduce operating costs by £1.5bn
1. Refers to the total number of UK stores with service model changes in FY 16/17.2. Refers to the reduction in the number of our UK distribution centres announced in January 17.3. Refers to the reduction in the number of transport suppliers in our Central European distribution network.
16
£131m £32m £63m
Store operatingmodel
Logistics anddistribution
Goods notfor resale
Reduce operating costs by £1.5bn
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99%93%
New terms1 Lower stockholding2 Improved availability3
Generate £9bn of cash from operations
1. Reflects percentage of small and largest suppliers who have moved to our standardised payment terms.2. UK total stockholding.3. Sales-based availability in the UK from 1H 14/15 to FY 16/17.
Total stock
FY 14/15 FY 15/16 FY 16/17
93% 96%
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Fresh Packaged GM Clothing Total
Large stores
Small stores
Online
Total
= < x%
= x%
= > x%
Colour of boxes illustrates indicative margin percentage relative to total
Maximise the mix to achieve a 3.5% - 4.0% margin
15/16: 1.8%
16/17: 2.3%
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107 stores Over 1,700 stores
+0.6%Orders
+2.1%Basket size
+5.6%Delivery saver
Sustainableonline model3
Large storesback to profit1
New convenienceservice model2
Maximise the mix to achieve a 3.5% - 4.0% margine.g. Channels, UK:
1. Reflects the number of stores that have returned to profitability since H2 14/15.2. Reflects changes to our management structures within our Express stores in FY 16/17.3. Reflects change FY 15/16 to FY 16/17.
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Maximise the mix to achieve a 3.5% - 4.0% margine.g. Category:
1. Data sourced from Kantar Worldpanel.
(3)%
(2)%
(1)%
0%
1%
2%
3%
4%
5%
Tesco Competitor 1 Competitor 2 Competitor 3
Gro
wth
%
Contribution of different categories to total growth4 w/e Till Roll for 4 weeks ending 01 January 2017
Food & Drink Alcohol Other Grocery Non-Grocery Total GrowthBeer, wine& spirits
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Range reset Own brandoutperformance1
Innovation2
Maximise the mix to achieve a 3.5% - 4.0% margine.g. Product:
+100% LFLspirits
sparklinglow alcohol
+8.2%
1. Reflects wine category like-for-like outperformance of the market for last 52 weeks to end of March 17 and is sourced from IRI Retail AdvantageTM, global insight providers to the retail industry.
2. Average weekly like-for-like sales growth for Craft and Speciality Beers in Express since range launch in October 16.
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Group50% 57%
UK & ROI41% 51%
7 storesrent £14m
Increased freehold ownership1 Further buybacks2 April 2017transaction
Maximise value from property
1. Percentage of freehold property for the Group (on a continuing operations basis) and UK & ROI owned by value, Feb 15 to Apr 17, including the effect of the April transaction.2. Represents annualised rent saving in relation to 16 stores repurchased.
16 stores
rent £22m
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1m sq. ft. 202 UKstores
Repurposing space Refurbishing storesRetail partners
Maximise value from property
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Value release Air rights Optimising land
Maximise value from property
£0.5bn
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Once every 5 seconds1 2,422
+10 prepared
meals
New products2 Free FromRetailer of the Year
Innovation
1. Frequency of transactions since nationwide launch in January 2017.2. New product lines introduced as part of FY 16/17 range review.
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Detailed results
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Group performance
Continuing operations FY 16/17Change
constant rates
Change actual rates
Group sales (exc. VAT, exc. Fuel) £49.9bn 1.1% 4.3%
Group operating profit before exceptional items £1,280m 24.9% 29.9%
Exceptional items £(263)m n/m n/m
Group statutory operating profit £1,017m (11.8)% (5.1)%
Group PBT before exceptional items and net pension finance costs £842m 54.1% 71.8%
Diluted EPS before exceptional items and net pension finance costs 7.90p - 40.8%
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Segmental performance
Sales Operating profit before exceptional items
FY 16/17 FY 15/16Change
constant rates 1
Changeactualrates1 FY 16/17 FY 15/16
Change constant
rates Changeactual rates
UK & ROI £37.7bn £37.2bn 0.6% 1.4% £803m £503m 57.7% 59.6%
International £11.2bn £9.7bn 2.1% 15.2% £320m £320m (12.5)% 0.0%
Bank £1.0bn £1.0bn 6.0% 6.0% £157m £162m (3.1)% (3.1)%
Group £49.9bn £47.9bn 1.1% 4.3% £1,280m £985m 24.9% 29.9%
1. Change shown on a comparable days basis.
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UK volume-based recovery UK like-for-like volume
(7.0)%
4.0%
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
LFL Scanned Singles Volume LFL Derived Volume
2014/15 2013/14 2012/13 2011/12 2015/16 2016/17
1. 3Q 15/16 adjusted for the impact of non-repeated coupons in the prior year.
1
30
(4.0)%
4.0%
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
UK transaction growth Year-on-year change in UK transactions by quarter %
2015/162014/152013/14 2016/17
1.0%
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UK and ROI like-for-like sales performance1
1. Exc. VAT, exc. Fuel.
(1.5)%
0.9%0.3%
0.9%
1.8%
0.7%
15/163Q
15/164Q
16/171Q
16/172Q
16/173Q
16/174Q
UK
(1.2)%
1.0%
0.3% 0.1%0.5%
(1.3)%
15/163Q
15/164Q
16/171Q
16/172Q
16/173Q
16/174Q
ROI
32
UK like-for-like sales performance1
(2.4)%
0.5%
(0.2)%
0.1%1.6%
0.0%
15/16 3Q
15/16 4Q
16/171Q
16/172Q
16/173Q
16/174Q
Extra
(1.2)% (1.1)% (0.5)% (0.1)%
0.9% 1.7%
15/16 3Q
15/16 4Q
16/171Q
16/172Q
16/173Q
16/174Q
Metro
3.8% 3.3% 2.7%3.8% 3.5%
2.8%
15/16 3Q
15/16 4Q
16/171Q
16/172Q
16/173Q
16/174Q
Express
1. Exc. VAT, exc. Fuel.
Online FY16/17: Grocery 2.9% General Merchandise & Clothing (14.1)%
(2.5)%
(0.0)%
(0.0)%
1.0%2.1%
1.2%
15/16 3Q
15/16 4Q
16/171Q
16/172Q
16/173Q
16/174Q
Superstore
33
UK like-for-like sales performance1: Extra
(6.2)%
(7.6)% (7.2)%
(2.9)%(2.6)%
(1.4)%
(2.4)%
0.5%
(0.2)%
0.1%
1.6%
0.0%
14/151Q
14/152Q
14/153Q
14/154Q
15/161Q
15/162Q
15/16 3Q
15/16 4Q
16/171Q
16/172Q
16/173Q
16/174Q
1. Exc. VAT, exc. Fuel.
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UK & ROI operating profit
£m
503
803
UK & ROIFY 15/16
Lower prices Volume andmix benefit
Other customerinvestment
Net costsavings
Other UK & ROIFY 16/17
35
International like-for-like sales performance1
1. Exc. VAT, exc. Fuel.
3.0%
4.1%
2.8%
1.3%
0.7%
(0.8)%
15/163Q
15/164Q
16/171Q
16/172Q
16/173Q
16/174Q
Europe
2.4%
3.5%3.3%
3.0%
0.4% 0.5%
15/163Q
15/164Q
16/171Q
16/172Q
16/173Q
16/174Q
Asia
36
International operating profit
£m
320 320
15/16 FYOperating profit
Lowerprices
Volumeand mix
Other customerinvestment
Net costsavings
Other 16/17 FYOperating profit
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• 3.5% growth in active customer accounts• Operating profit pre exceptional items down (3)%• Before impact of net interchange +29%• Strong lending growth +17%• Funded by customer deposits• Ongoing cost saving programme• Capital and liquidity remains strong
Tesco Bank
FY 16/17 FY 15/16
Lending to customers £10.0bn £8.5bn
Net Interest Margin 4.0% 4.2%
Cost: income ratio1 62% 66%
BDAR2 1.1% 0.8%
Tier 1 capital ratio 16.7% 16.6%
1. Adjusted for £(45)m customer redress and £(35)m restructuring; Statutory cost:income ratio FY 16/17 71% and FY 15/16 66%.2. Bad Debt to Asset Ratio.
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• 4.8 million customers; 4.4% customer growth• 5th largest mobile network in the UK and the
largest MVNO• 462 stores; over 3,000 colleagues• Re-launch of Tesco Family Perks• Highest level of customer satisfaction in UK1
• Lowest level of customer complaints in industry2
• A Which? Recommended Provider
Tesco Mobile
3.5m
4.0m
4.4m4.6m
4.8m
12/13 13/14 14/15 15/16 16/17
Customer base
PAYG PAYM
1. Based on a Net Promoter score of how likely customers are to recommend Tesco Mobile to a friend.2. OFCOM quarterly complaint report as at March 29 2017.
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FY 16/17 FY 15/16
Net impairment1 £(6)m £(423)m
Restructuring and redundancy £(199)m £(126)m
Tesco Bank customer redress £(45)m -
Interchange settlement £57m -
Property transactions £165m £156m
Provision for SFO and FCA obligations £(235)m -Past service credit and associated costs arising on UK defined benefit pension scheme - £480m
Total exceptional items in operating profit £(263)m £87m
Exceptional items
1. Net impairment of property, plant and equipment, onerous lease provisions and intangible assets.
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Finance income and costs
FY 16/17 FY 15/16
Interest received £48m £29m
IAS 32 and 39 ‘Financial instruments’ - fair value measurements £61m £(19)m
Interest payable £(523)m £(490)m
Capitalised interest £6m £6m
IAS 19 net pension finance costs £(113)m £(155)m
Net finance costs1 £(521)m £(629)m
1. Statutory net finance costs include a £(244)m (FY 15/16 £(220)m) impact from FX losses on translation of balances received from Korea disposal being held in a non-Sterling denominated subsidiary.
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Tax
FY 16/17 FY 15/16
Profit before tax before exceptional items £729m £335m
Tax charge £(185)m £(8)m
Effective tax rate 25.4% 2.4%
• Expect c.25% full year effective tax rate for FY 17/18
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Earnings per share1
FY 16/17 FY 15/16 Change3
Profit before tax before exceptional items and IAS 19 pension finance costs2 £842m £490m 71.8%
Diluted earnings per share before exceptional items and IAS 19 pension finance cost 7.90p 5.61p 40.8%
Statutory profit before tax £145m £202m (28.2)%
Diluted earnings per share 0.81p 3.22p (74.8)%
1. For continuing operations.2. Attributable to the parent only.3. At actual rates.
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1,690
2,278
201
387
(582)
(952)
744
286
133
219 1,381
Cash flow fromretail operations
Impact fromexceptionals and
Turkey
Underlying workingcapital
Retail cashgenerated from
operations
Interest and Tax Capex Free cash flow Net impact ofdisposals
Net impact ofproperty disposals
Other Reduction in netdebt
Movement in net debt£m
1. Before buyback of property.
1
44
Capex on existing space / existing businesses
Asia£262m
UK & ROI£731m
Europe£141m
Capex on new space / new businesses
Capital expenditure
Note: Excludes capex on Tesco Bank.
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£8.5bn
£5.1bn
£3.7bn
FY 14/15 FY 15/16 FY 16/17
Net debt
£9.4bn
£7.8bn£7.4bn
FY 14/15 FY 15/16 FY 16/17
Lease commitments
Total indebtedness
£3.9bn
£2.6bn
£5.5bn
FY 14/15 FY 15/16 FY 16/17
Pension deficit
46
Pension scheme
• IAS 19 deficit calculation impacted by drop in corporate yields –no change in underlying cash commitments to pension members
• Asset de-risking strategy completed• Continued strong performance of scheme assets• Long-term deficit funding plan of £270m per annum cash contribution • Triennial valuation process started in March 2017
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Property1
FY 16/17 FY 15/16
% selling space ownedUK & ROI 52% 52%International 74% 71%Group 63% 61%% total property owned - by value2
UK & ROI 50% 47%International 78% 75%Group 57% 54%
1. Based on continuing operations and does not include impact of April 17 British Land transaction.2. Excluding fixtures and fittings.
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Liquidity position
• Strong liquidity• £3.0bn available cash• £4.4bn in committed facilities maturing 2019-21• £1.9bn of debt repaid in 2016/17; £1.5bn of maturities in 2017/18
£0bn
£1bn
£2bn
17/1
8
18/1
9
19/2
0
20/2
1
21/2
2
22/2
3
23/2
4
24/2
5
25/2
6
26/2
7
27/2
8
28/2
9
29/3
0
30/3
1
31/3
2
32/3
3
33/3
4
34/3
5
35/3
6
36/3
7
37/3
8
38/3
9
39/4
0
40/4
1
41/4
2
42/4
3
43/4
4
44/4
5
45/4
6
46/4
7
47/4
8
48/4
9
49/5
0
50/5
1
51/5
2
52/5
3
53/5
4
54/5
5
55/5
6
56/5
7
57/5
8
Debt Maturity Profile
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Improving debt metrics
FY 16/17 1H 16/17 FY 15/16Net Debt/EBITDA1 1.6x 2.1x 2.7xFixed Charge Cover2 2.2x 2.0x 1.9xTotal indebtedness ratio3 5.0x 5.6x 5.1x
1. EBITDA is based on continuing operations (excluding Turkey).2. EBITDAR/(Interest + Rent).3. Net Debt + pension deficit + NPV of lease obligations/EBITDAR.
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Financial summary.• Strong growth in Group sales +4.3%• Profit recovery continues; 30% increase in Group operating profit before exceptional items• Diluted EPS before exceptional items and IAS 19 pension finance costs +40.8%• Improved cash generation including a £387m underlying working capital benefit• £1.9bn debt maturities paid• Strong liquidity position with £3.0bn available cash
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Big 6 Full Year Performance
Growsales
Customers recommend us and come
back time and again
Colleagues recommend us as a great
place to work and
shop
We build trusted
partnerships
Improve operating
cash flow*
Deliverprofit
The Big 6 across the Group
Growsales
Customers recommend us and come
back time and again
Colleagues recommend us as a great
place to work and shop**
We build trusted
partnerships
Improve operating
cash flow*
Deliverprofit
The Big 6 across UK & ROI
* Excludes the impact of providing colleagues the option of receiving the 2015/16 Turnaround Bonus in cash rather than shares.** Based on year on year progress in colleague recommendations of Tesco as a great place to shop.
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Building long-term value for our four key stakeholders
Customers Supplier partnersColleagues Shareholders
53
Customers
54
80% 129,635hours
Speed of service1 Record helpfulness2 Colleagues closer to customers3
Better service
1. Reflects customers’ rating of the length of time queuing at checkout versus competitors as part of the periodic Customer Spotlight survey.2. Reflects customers’ rating of staff helpfulness as part of the periodic Customer Spotlight survey.3. Refers to the additional number of colleague hours as a result of changes to the replenishment model.
FY 14/15 FY 15/16 FY 16/17
“I don’t queue”
Tesco Big 4
55
Record availability
"Was everything you wanted to buy available?1"
1. Reflects customers responding positively to “Was everything you wanted to buy available?” as part of the periodic Customer Spotlight survey.
70%
82%
FY 14/15 FY 15/16 FY 16/17
"Was everything you wanted to buy available?"
Tesco Big 4
56
96%
Sales-based availability1 Clearer backrooms2 Available at all times3
Record availability
1. Sales-based availability at FY 16/17.2. Reflects total UK food stock holding over the last three years.3. Reflects customers responding positively to “How satisfied were you with the level of stock on everything you wanted to buy?” between 6pm and 9pm as part of the periodic
Customer Spotlight survey.
£935m
£836m
£755m
FY 14/15 FY 15/16 FY 16/17 FY 14/15 FY 15/16 FY 16/17Tesco Big 4
Food stock Evening availability
57
6%lower 36% 32%
Lower prices1 Fewer promotions2 Depth of promotions3
Clearer, lower and more stable prices
15%
1. Price data shows the price paid for a typical basket of products from August 2014 to February 2017.2. Reflects the change in promotional participation from FY 15/16 to FY 16/17.3. Reflects the change in promotional giveaway from FY 15/16 to FY 16/17.
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7% +3%
Further range reduction1 Further increasein own label space2
One touch replenishment3
Right range
7%cases
1. Represents range reduction from FY 15/16 to FY 16/17.2. Reflects increase in linear shelf space to own label products as part of the range review.3. Reflects 1.2m total cases delivered straight to shelves as a result of the new ordering system.
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46% 19% 1,200fixtures
New range2Reduced assortment1 Clearer aisles3
Right range: Express
1. Reflects the reduction in the master range assortment available for Tesco Express stores.2. Reflects the percentage of the range that is new after the range review.3. Reflects the decrease in the number of discretionary fixtures in Express stores.
60
Colleagues
61
65%
Engaged colleagues1 A simpler job2 A great place to shop3
A great place to work
70%
81% 83%
FY 14/15 FY 15/16 FY 16/17 FY 15/16 FY 16/17
1. Reflects % of colleagues recommending Tesco as a great place to work as part of our ‘What Matters To You?’ survey undertaken every January and August.2. Reflects % of colleagues agreeing that “it’s become simpler to do my job over the last 12 months” as part of our ‘What Matters To You?’ survey undertaken every January and August.3. Reflects improvement in NPS of colleagues recommending Tesco as a place to shop as part of our ‘What Matters To You?’ survey undertaken every January and August.
+7 NPS
62
Upper Quartile1
Competitive package Valued rewards Health and wellbeing
Investing in colleagues
1. Reflects our commitment to pay colleagues in the top 25% of their peer group.
1.8mfree fruit for colleagues
63
4,000 promotions
Developing talent Apprenticeships Everyone is Welcome
Opportunities to get on
2,500+300 16/17+2,500 17/18
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Strengthening the team
Jane LawrieGroup Communications
Director
Guillaume Bacuvierdunnhumby CEO
Tony HoggettAsia CEO
Matt SimisterCentral Europe CEO
Alessandra BelliniChief Customer Officer
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Suppliers
66
1,000 inductions
Online supplier training2 Support forsuppliers3
Working together1
Simpler ways of working
94%
1. Represents the percentage of suppliers who believe the Supplier Network has helped to develop their relationship with Tesco.2. Represents registrations on the Tesco Supplier Training Essentials website.3. Represents the number of new suppliers and new employees within existing suppliers who have attended a Tesco induction event in the last two years.
2,250 registrations94%
67
35%
New customer offer1 Shared savings2 More efficientfor suppliers3
True partnerships - Meat
33%
1. Represents increase in steak volumes in FY 16/17.2. Estimated efficiency savings achieved from increase in volumes.3. Operational savings achieved due to suppliers’ ability to invest in new machinery.
22%
68
Simple, transparent & easy to deal with
Communicates well & available when needed
Treats me fairly
Building trust
Note: All measures reflect % of UK suppliers responding positively to above statements as part of the UK Supplier Viewpoint survey last undertaken in February 2017.
36%
49%
63%
FY 14/15 FY 15/16 FY 16/17
44%
67%74%
FY 14/15 FY 15/16 FY 16/17
55%
66%74%
FY 14/15 FY 15/16 FY 16/17
69
Shareholders
70
3.5% - 4.0%
Welwyn Garden City Seminar
Six strategic drivers Medium-term ambition
Sharing our plans
71
Dividend policy
• Reflects improved performance and Board confidence• Intention to recommence dividends in respect of 2017/18 financial year• Expected to grow progressively• Targeting cover of around two times earnings per share over the medium-term
72
Unlocking new growth
73
PRODUCT CHANNELS CUSTOMER
The UK’s leading food business
In home
Out of
home
Improved choice / rangeEnhanced volume for efficiency
e.g. full crop utilisationEXISTING
NEW
Fresh Packaged GM Clothing Professional
Large stores
Small stores
Online
Wholesale
Incremental to standalone 3.5% - 4% margin ambition
74
Growth Synergies Multiple
The UK’s leading food business
At least£25m
At least£175m
9x EV/EBITinc. synergies
75
Core Core New
Geography Product Channel
Industryleading
> WACC2 years
Expertise Returns
£85bn market
growing at 3.8%
Growth1
&
1. M&C Allegra Foodservice ‘15-’18 CAGR for the out of home market.
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Summary.• Results ahead of our expectations
- 30% increase in Group operating profit before exceptional items- 60% increase in UK & ROI operating profit before exceptional items
• Creating long-term value for all our stakeholders• Continuing to deliver on our six strategic drivers• Well-placed to prosper in a challenging environment• Proposed merger with Booker unlocks new growth
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Q&A
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Disclaimer.This document may contain forward-looking statements that may or may not prove accurate. For example, statements regarding expected revenue growth and operating margins, market trends and our product pipeline are forward-looking statements. Phrases such as "aim", "plan", "intend", "anticipate", "well-placed", "believe", "estimate", "expect", "target", "consider" and similar expressions are generally intended to identify forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from what is expressed or implied by the statements. Any forward-looking statement is based on information available to Tesco as of the date of the statement. All written or oral forward-looking statements attributable to Tesco are qualified by this caution. Tesco does not undertake any obligation to update or revise any forward-looking statement to reflect any change in circumstances or in Tesco’s expectations.